I am running a variety of Social Security retirement proposals on your maximizemysocialsecurity website. I plan on waiting until 70 to collect my benefit. My wife will be 66 in January and will request her FRA benefit at that time. Each time I ran a scenario that delayed her entitlement month (January, February, March) her benefit expectantly increased, yet her spousal benefit decreased leaving the net annual benefit the same? My benefit at age 70 will not change. Why then does her spousal benefit (presumably 50% of mine) decrease as she delays retirement benefits?
Hi,
I answer questions submitted to this website but I don't have access to our software customers' data or results. Software customers are encouraged to submit questions regarding use of our software or their results using an online contact form available in the software's help menu. Your question can then be answered by one of our experts with access to your data.
What I can tell you is that unreduced spousal benefits are calculated based on 50% of the primary insurance amount (PIA) of the worker on whose record the spousal benefits are paid. But, if the spouse who is eligible for spousal benefits is drawing on their own Social Security record, the higher of a) their own PIA or b) their own PIA augmented by delayed retirement credits (DRC), is subtracted from 50% of higher earner's PIA.
For example, say John is drawing his retirement benefits at FRA with a PIA of $2000. John's wife, June, has a PIA of $800, so if she claims her retirement benefits at FRA she would be eligible for her own full PIA of $800 plus an excess spousal benefit of $200 (i.e. $2000/2 - $800). However, if June waits a year past her FRA to start drawing benefits her own benefit rate would be 8% higher than her PIA, or $864, and her spousal rate would be $136 (i.e. $2000/2 - $864). Therefore, if a spouse's own PIA is significantly less than 50% of their spouse's PIA it would usually be disadvantageous to wait past FRA to claim their Social Security retirement benefits.
Best, Jerry
